A Modern Plan for Historic London Market

Australian Developer Wants Freedom to Build Mix of Retail and Offices

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A rendering of the interior of Smithfield Market under redevelopment plans by Henderson Global Investors.
Henderson Global Investors

By

Peter Evans

Jan. 29, 2013 6:23 p.m. ET

Surrounded by winding streets with names like Cloth Fair, Cowcross Street and Hosier Lane, London's Smithfield Market is steeped in history. Meat and livestock have been traded for more than a thousand years on the site, which also was where Scottish revolutionary hero William Wallace was executed in 1305.

But London's landscape is changing, and history is taking a back seat. Soon-to-be-submitted proposals aim to redevelop parts of the market that have lain desolate for decades—despite their prime location on the edge of the city's financial district.

If the plans for a £160 million ($258.2 million) mix of retail and office space are approved, Smithfield will add its name to a growing list of historic buildings in European cities to undergo makeovers.

With demand for office space declining among financial-services firms and many retailers reducing their number of stores, developers are looking for new ways of attracting tenants to high-rent locations. Many see the potential for bringing high-level office tenants and big-name retailers to regenerated historic buildings, which often have great locations, transport links and the prestige of a storied past.

But significant obstacles prevent developers from building on Europe's historic buildings as they choose. Strict government laws protect many properties from development. Conservation groups often protest against changes, causing costly delays to the planning process, or derailing it altogether.

The proposals for Smithfield Market, outlined by Australian property developer Henderson Global Investors, have run into protests from local residents and campaign groups who fear a repeat of the much-criticized redevelopment in the early 1970s of Les Halles in Paris—a 19th century market hall—into an underground shopping precinct.

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Stall holders and porters in the market in 1936.
Associated Press

"Once a historic building's gone, it's gone forever," says Clementine Cecil, director of lobby group Save Britain's Heritage, echoing a cry heard throughout Europe from campaigners unwilling to compromise on architectural history. "Every single change to a historic area has huge consequences for what happens next."

At Smithfield, "one of the grandest processions of market buildings in Europe is hanging in the balance," Ms. Cecil says.

Henderson will submit the formal planning application to the City of London Corp. by the end of February. The developer announced the proposals in October. The plans consist of ground floor restaurants and retail units on the site of the old market, with six floors of office space on top.

London has a tradition for redeveloping its historical markets, and Smithfield would be the latest in a line of renovations, including Leadenhall Market and Covent Garden, both of which still stand on their medieval sites and mix original architecture and modern design.

Although many developments aim to preserve much of the architecture of the buildings they work on, an impasse between developers and conservation groups is growing. Barcelona's Las Arenas bullfighting stadium in the heart of Spain's second city reopened in 2011 as a €200 million ($265 million) shopping mall, designed by Richard Rogers, the architect behind the controversial Pompidou Center in Paris and London's Millennium Dome. Unused since 1977, only its facade was retained and the rest made way for shops, restaurants and a cinema.

"Some of the responses are alarmist," says Geoff Harris, who is overseeing the "conservation-led approach" to the Smithfield project as director of property development at Henderson. "If one wants to put these buildings back into proper use, you have to find a solution to the viability." He adds that there already has been interest from prospective tenants. Henderson's other retail assets are mainly purpose-built shopping centers, notably the Bullring in Birmingham and Shopping-Cite in Baden Baden, Germany.

Smithfield is on the edge of London's financial district, where office rents reach £100 a square foot, and it also backs onto one of the stations that will be part of Crossrail, a major new rail development scheduled to open in 2018. That combination of proximity to high rents and transportation has increased its appeal to developers and tenants, according to Mr. Harris.

Other examples of iconic buildings receiving a refresh include Milan's Porta Nuova, Belfast's shipyards and the Mercado de San Miguel in Madrid, as well as a number of state-owned historical sites ready to be sold off to private firms by euro-zone governments.

Meanwhile, the cachet of opening in an eye-catching location is a big pull for prospective occupants wishing to make a statement with their new office or flagship store.

Developers often target long-abandoned historic sites believing they can greatly improve the property's value. British Land Co.BTLCY1.48% PLC, a U.K. real-estate firm, recently invested in a former brewery in Lancaster, in northwest England. The company, which plans to develop a mixed use project, believes its landmark status will add to its profit potential. "We are confident that a relatively modest initial investment could lead to a future development with a targeted end value of over £75 million," says Richard Wise, head of retail development at British Land.

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